Frequently Asked Questions

If I am self-employed, what kind of retirement plans can I establish?

Self-employed people are incredibly busy. Fortunately, they can worry less about their retirement security, and focus more on running the business, by choosing from one of the many plans available. Here is a list of the most popular plans, with some of the unique benefits and qualifications of each. More information about the tax and contribution limits can be obtained from the IRA website at www.irs.gov.

Simplified Employee Pension (SEP)

401(k) Plan

A one-participant 401(k) plan is sometimes referred to as a “solo-401(k),” “individual 401(k)” or “uni-401(k).” It is generally the same as other 401(k) plans, but because there are no employees other than your spouse who work for the business, it is exempt from discrimination testing.

  • You can make salary deferrals up to $17,500 in 2014 and $18,000 in 2015 (plus an additional $5,500 in 2014 and $6,000 in 2015 if you’re 50 or older) either on a pre-tax basis or as designated Roth contributions.
  • You can contribute up to an additional 25 percent of your net earnings from self-employment for total contributions of $52,000 for 2014 ($53,000 for 2015), including salary deferrals.
  • A 401(k) plan allows you to tailor your plan to allow access to your account balance through loans and hardship distributions.

Savings Incentive Match Plan for Employees (SIMPLE IRA Plan)

  • You can put all your net earnings from self-employment in the plan: up to $12,000 in 2014 and $12,500 in 2015 (plus an additional $2,500 in 2014 and $3,000 in 2015 if you’re 50 or older) in salary reduction contributions and either a 2% fixed contribution or a 3% matching contribution.
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